The Affordable Care Act (ACA) Survives its Supreme Court Challenge. What to do next?
This is the fifth (5th) article Wilkening & Company has published on the impact of the Affordable Care Act (ACA) upon businesses and their employees. We have written on the subject as recently as April 2012. A directory of (and links to) our articles is included at the conclusion of this note for your convenience.
When we last wrote on ACA it was our opinion that no matter what the outcome of the Supreme Court decision on its constitutional merits, three things were evident to us—
- Some portions of the law—primarily guaranteed coverage without consideration for pre-existing conditions—would survive in some form, even if ACA were stricken in its current form.
- Most employees have no idea what is written in the law (nor do many employers) and will likely be shocked when companies begin to take actions directed by or suggested in the law—like to either continue to insure your employees or pay some unknown 3rd party to do it.
- If an employer is prepared for the inevitable change that is coming they will be better off and will likely save themselves a bunch of money, plus avoid unneeded people & compliance trouble.
With the recent Supreme Court’s decision upholding the constitutionality of ACA, many believe that the future of the law now depends upon the result of the November presidential election. Some are taking a wait-and-see approach that surely demonstrates due caution and economy of action.
We continue to feel somewhat differently. While no one yet knows the ultimate outcome and ACA’s fate, we believe it is best to begin planning for what could (and likely will) happen in the next 12 months—without regard for the election’s result. It is just prudent and requires a reasonable investment of effort or foresight.
For example for the year ending December 31st, 2012, ACA requires employers report the cost of employer-sponsored health coverage on Form W-2.But it will not yet be taxable to the employee. (This is only one of nearly 4 pages of ACA summary regulations published by the IRS alone.) You are likely going to have to do W-2 reporting without regard to who wins in November, for no politician will be able to resist knowing the future tax-revenue potential of this currently hidden benefit and substantial chunk of untaxed employee compensation.
In April, we suggested that employers appoint a company Executive-in-Charge (EIC) for employee health-care coverage and change. We recommended the EIC be appointed promptly and the CEO and Board be briefed by the EIC in the 3rd and 4th Quarters regarding what compliance efforts (e.g., W-2’s) and healthcare market planning are required and prudent. [For more on the proposed role of the EIC you may reread our April 2012 E-Notes]
This action may be more important today, than when we wrote it in April. The more we research ACA the clearer it becomes that there is no single prescription for what an employer must do to comply with the law and assure the best outcome for the employer and its employees. This is generally true because: 1.) Provisions of the law & IRS code cleverly parse and segment employers and their requirements, and 2.) The unique economics or demographics of each company may require very different responses. Hence, your compliance & health coverage (short- and long-term) action plans will be quite specific and uniquely tailored to your needs.
One size will likely not fit all, and work will be needed to investigate options. Appointing your Executive-in-Charge is the first step in making informed decisions and getting best control of future employee healthcare costs.
And if Washington decides to throw out ACA (as written) on December 1st, you have not expended much effort and will surely know a lot more about what it will take to successfully operate in future employee-healthcare insurance markets. You will also have taken a step to show your employees the company is taking action on their behalf in these “unsettling” times—that in itself is an added employee benefit.
If you do not have an executive assigned to ACA for your company, I suggest you appoint one. If you are the CEO and you figure that is your job, do not underestimate the time you will need to spend on this time-consuming and complicated task.
And whether agree with our 2012 approach to ACA or not, spend the time to become knowledgeable of the issues and prepared to act before year end.